The International Consortium of Investigative Journalists (ICIJ), a global network comprising hundreds of reporters which helped highlight major money laundering operations such as the Panama Papers, has turned its attention to cryptocurrency, and found an almost inexhaustible trove of iniquity.
The ICIJs series of investigative reports into crypto, dubbed the Coin Laundry, showed how illicit funds are funneled through major exchanges such as Binance, OKX, Coinbase, Kraken, Bybit and Kucoin.
The crypto funds tracked by ICIJ were linked to criminal enterprises across the world including North Korean hackers, Chinese and Russian criminal gangs focused on people trafficking, drug dealing substances like fentanyl, Mexico’s Sinaloa drug cartel, as well as and brazenly carried out using “crypto-cash storefront” operations in places like Ukraine and Dubai.
The ICIJ said its findings demonstrate “how the rise of blockchain technology — coupled with the speed, anonymity and global reach of cryptocurrency transactions — has quietly spawned a shadow financial system that operates faster, darker and further beyond the reach of regulators and law enforcement.”
In practise this means a drug cartel, lets say, can easily use a whole new financial system involving dollar-pegged stablecoins, for instance, to move cash around, whereas in the old days the criminals would have to stuff cash in to the boot of car, according to one analyst ICIJ spoke with.
“For decades, we’ve shown how hidden money moves through offshore havens. Now we’re revealing how the same forces are exploiting crypto markets to move illicit cash in plain sight,” said ICIJ Executive Director Gerard Ryle in a statement.
“Our investigation raises urgent questions: How complicit are major crypto exchanges in enabling criminal activity? And why are regulators struggling to keep pace with a financial system that thrives on opacity and speed?” he asked.
The cryptocurrency trading world is scrutinized by several large so-called blockchain analytics companies that trace illicit funds and suspect wallet addresses, many of whom are contracted to work with the compliance departments of the big exchanges. The ICIJ investigations appear to have relied on some smaller, independent blockchain sleuths to carry out its analysis.
More than 100 journalists from more than 35 countries partnered with ICIJ on the project. Media partners include The New York Times, Le Monde, The Toronto Star, Malaysiakini, The Indian Express and the Australian Financial Review.
Coindesk reached out to Binance, OKX, Coinbase, Kraken, Bybit and Kucoin for comment.
